Israel's Mossad spy agency said Thursday it had "apprehended" an Iranian plotting to kill an Israeli in Cyprus, with his interrogation "on Iranian soil" leading to arrests by Cypriot security forces.

The rare statement comes after the office of Israeli Prime Minister Benjamin Netanyahu commended on Sunday "the thwarting of the Iranian terrorist attack in Cyprus against Israeli targets," without providing further details.

Cypriot authorities have declined to comment on the matter, but local media, citing unnamed sources, reported a foiled plan to attack Israeli or Jewish targets by suspects operating from a breakaway statelet, recognised only by Turkey, in the north of the divided Mediterranean island.

The Mossad said an Iranian man named Yusef Shahabazi Abbasalilu was "apprehended" in "a counter-terrorist operation on Iranian soil".

In his interrogation, according to the Israeli agency, he confessed to having "received detailed instructions and weapons from senior Revolutionary Guards personnel in Iran" regarding an Israeli businessman he was to assassinate in Cyprus.

A video distributed by the Mossad, which could not be verified by AFP, shows a man said to be Abbasalilu detailing his arrival in Cyprus and preparing to kill an Israeli with the help of "Pakistanis" there.

The man then recalls being ordered by his Iranian handlers to return to Iran since the Cypriot police was on his tail.

"In the wake of the information that he gave to investigators, the cell was dismantled in an operation by the Cypriot security services," the Mossad said, noting "a series of arrests in Cyprus last week".

The Israeli agency said it had exposed part of "a continuing effort to carry out terrorist attacks and harm Israelis and Jews around the world".

Earlier this month, Netanyahu said that the vast majority of Israel's "security problems stem from Iran and its proxies".

Israel also accuses its arch-foe of seeking to obtain nuclear arms, a claim Iran denies.

Speaking at a military ceremony on Thursday, Netanyahu said Israel would not be bound by any international agreement of Tehran's nuclear programme, adding: "We will retain our right and duty to defend ourselves, by ourselves, from any threat."